Web 2.0 business models for hotels and travel industry

Hotels and the travel industry have been amongst the first to embrace the web and ride the world wide web revolution. Over the past 5 years GDS systems have lost their predominance as more and more users turned to the web for do-it-yourself holidays.

These days I am talking to my Clients in the travel industry, mostly hotels in Tuscany. Over the years we have built up a stable work relationship and constant flow of information to and from them.

Every year I travel to Tuscany and visit them. We talk about the seasonal results, verify web site performance, and define activities for the new year.

You might find it interesting to know that hotels in Siena and Florence have experienced a drop in price due to:

the economical crisis

the increase in competition

The core business of a hotel is accommodation. But accommodation has become a click-and book activity the end user has learned to play very well and needs no intermediation.

Hotels play on as many tables as they possibly can, by placing their offers on a large number of portals.They are constantly monitoring competition and ready to drop prices in real time if and when necessary.

The use of online booking systems and hotel portals has increased the pressure on prices.

Hotel rooms are soon to become a commodity

There are many similarities between computer and hotel room pricing.

Hotels can now break this downward spiral (that will send many out of business sooner or later) introducing web 2.0 innovations. Blogs and social networks will shift the attention from prices to services.

I also expect a more integrated approach between hotels and the territory that will go beyond the free sale of hotel rooms.

This is what I am telling my Clients – what do you think web 2.0 will bring the travel industry ?

9 Replies

I agree with you about the shift in focus that hotels will go through thanks to Web 2.0. You’re absolutely correct that booking rooms is such a simple task these days that it can hardly be called a distinctive competency anymore. The real distinctive competencies and competitive advantages will appear in the form of services. It’ll be interesting to see what these hotels come up with….

New business models will be a combination of external pressure (the market place), inputs from people like myself, and politics. Here in Italy hotels are mostly small businesses and need this kind of support most.

Web 2.0 will make it easier for people to choose their hotels and transportation. Web 2.0 will help the travel industry a lot, but actually it will have the same effect on all industries.

I think that hotel prices aren’t becoming a commodity, just more efficiently priced. Think about it like the stock market. “Stocks” are not a commodity. Just like IBM is valued more highly than some penny stock, some hotels are better than others and people are willing to pay more. With Web 2.0, supply chain management, and other technologies, hotels are just learning how to price themselves more efficiently.

Web 2 is already in play in many corporations. With the information on the web nowadays, with thousands and thousands of hotels in Bangkok, New York, well all over the world, it’s a necessary software to be able to give customer efficient service, web 2 is the way of the future.

Branson Condos

Many people don’t realize that the Web 2.0 standards are actually just a reference to the level of user interaction with a website. It has nothing to do with graphics or design. It’s alll about how immersed a user is and what functions the website allows users to have. Web 2.0 programs are basically full-blown software applications that run server-side and through the web browser, without the need to install anything on the local machine. Will this help hotels? I think so – chances are most of the so-called “web 2.0” technologies are already in place if you have any kind of user interaction on your site.